Effects of China’s Corn Stockpiling System Reform on Family Farms’ Decision to Join Cooperatives

Liu Wenxia 1, Du Zhixiong 2 and Gao Liangliang 2
1 Research Institute for Countryside Rejuvenation in China’s Karst Regions, Guizhou University, Guizhou, China
2 Rural Development Institute (RDI), Chinese Academy of Social Sciences (CASS), Beijing, China

Abstract: Reform of the corn stockpiling policy is a key initiative for advancing China’s market-based grain stockpiling reform. It is a critical component of China’s exploration of a price formation mechanism for agricultural products. Evaluating the effectiveness of such reform is therefore of great relevance. Based on nationwide farm monitoring data of 2014, 2015 and 2016, this paper examines the effects of the corn stockpiling reform on the decision of family farms to join cooperatives. Our finding suggests that after other factors that influence the decision of family farms to join cooperatives are controlled for, the probability of corn farms to join cooperatives in the Northeast and Inner Mongolia, where the corn stockpiling reform was carried out in 2016, is significantly higher compared with the probability of corn farms in non-reform areas that did so. The reason is that after the reform, corn producers must sell their corn to the market instead of to the State, bringing them sales problems, which could be mitigated to some extent by joining cooperatives. Thus, the corn stockpiling reform incentivized the market-based behavior of agricultural producers, giving play to the role of market mechanisms in regulating production and demand.

Keywords: reform of the corn stockpiling system, family farms, cooperatives, marketbased sales

JEL Classification Codes: D21, Q12, Q18
DOI:1 0.19602/j .chinaeconomist.2019.5.08

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